Mexico's bargaining chips with Trump? How about a corn boycott

President Trump promised a sweeping trade overhaul, but a draft letter provided to Congress suggests a modest revamp of the North American Free Trade Agreement. (Sign up for our free video newsletter here http://bit.ly/2n6VKPR)

First domesticated here 10,000 years ago, corn is not only a staple of the Mexican diet, but also a symbol of Mexico itself.

Since the passage of the North American Free Trade Agreement in 1994, it has also become a symbol of Mexico's growing economic dependence on the United States.

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Now, as President Trump threatens Mexico with drastic changes on trade, its leaders are wielding corn as a weapon. Mexico's Senate is considering legislation calling for a boycott of U.S. corn, and the government has begun negotiating with Argentina and Brazil to import corn from those nations tax-free.

The threat of a boycott is Mexico's latest and perhaps cleverest attempt to fight back against Trump, whose threats to pull out of free trade agreements and slap a 20% import tax on Mexican products have shaken confidence in Mexico's economy.

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Mexico, which exported surplus corn as recently as the early 1980s, now buys a third of the corn it consumes from the United States. Last year, it purchased $2.5 billion worth of corn from Iowa, Nebraska and other states, making Mexico the largest corn export market for U.S. farmers.

Trump points to a roughly $60-billion trade deficit in Mexico's favor as justification for a major overhaul of one of the United States' most important and historically stable trading partnerships.

Corn, a staple in the Mexican diet, featured in a 2008 protest in Mexico City against removing tariffs on U.S. and Canadian farm goods as part of the North American Free Trade Agreement. (Eduardo Verdugo / ASSOCIATED PRESS)

Organizers of the boycott say their goal is to highlight how much certain U.S. sectors depend on that relationship.

"Trump says Mexico takes advantage of the U.S.," said Mexican Sen. Armando Rios Piter, who introduced the legislation last month after being inspired by a group of Mexican American immigrant rights activists calling for a boycott.

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"We need to make it clear how much many states win from trade with Mexico," said Rios, a member of the left-leaning Democratic Revolution Party. "It's important that people in the Midwest know what Mexico means to them."

Analysts say that although the proposed boycott is unlikely to pass, it is a deft political move because its biggest effects would be felt in Iowa, Nebraska, Wisconsin and other states that voted for Trump in last year's presidential election.

For now, U.S. farmers have a clear advantage over South American sellers, thanks to proximity and a logistics system built up over decades, plus duty-free access that gives the U.S. an additional edge on prices. But elected leaders and agriculture advocacy groups in those states are now on high alert.

Tom Sleight, chief executive of the U.S. Grains Council, said he was worried about a shift in Mexican corn purchases, noting that Mexican customers who met with him this month were upset with the tone of NAFTA renegotiations. "They want to keep it business as usual, but there's consistent talk about a Plan B," he said.

In private meetings with Trump's trade officials and in public settings, lawmakers have repeatedly warned about the potential harm to U.S. farmers should Mexico move to diversify grain imports by buying from suppliers in South America or other markets.

"I can't stress enough that there will be real and immediate economic consequences for farmers if we lose exports," Charles E. Grassley, the Republican senator from Iowa, said at a confirmation hearing this month on Robert Lighthizer, Trump's nominee for the U.S. trade representative.

In a letter to Trump's National Trade Council last month, another Republican, Nebraska Sen. Ben Sasse, expressed similar concerns. "Nebraska farmers cannot become collateral damage in a trade war," he wrote.

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"I would strongly urge the administration to act immediately to prevent any lasting damage to Nebraska agriculture exports by demonstrating that Mexico will continue to be a valued trading partner and that future negotiations will be conducted in good faith," the letter said, noting that Nebraska exported 17% of its corn to Mexico in 2014.

In the top corn-producing state, Iowa, which exported about 8% of its corn to Mexico last year, agriculture leaders are trying to calibrate their best response.

Bob Hemesath voted for Trump in November. But Hemesath, the chairman of the Iowa Corn Growers Assn., has been unhappy with some of Trump's actions on trade, including making good on a campaign promise to withdraw from the Trans-Pacific Partnership, a deal that Hemesath believes would have helped U.S. farmers.

"Mexico is one of our top markets," Hemesath said.

Although he continues to support Trump, he said, it will be incumbent on farmers like him to remind the president of their concerns. "We're just going to continue to advocate with the administration about the importance of keeping these markets open," he said.

Even though California barely grows any corn, the state's $47-billion agricultural industry is also watching nervously for any signs of a trade war with Mexico.

Last year, California exported $2.3 billion in agricultural products to Mexico — its fifth-largest trading partner — including lumber, dairy products, fresh fruit and nuts. Many California-based growers also have operations south of the border, especially for berries and vegetable crops.

The Golden State's farms, ranches and dairies are roughly twice as dependent on foreign trade as the country as a whole. Last year, California agriculture earned $21 billion from trade — about 44% of its total revenue, according to the state Department of Food and Agriculture.

Whereas NAFTA has benefited many U.S. farmers, Mexico's agricultural industry has not fared as well. Tomato and avocado farmers have benefited, but large swaths of the country that long relied on the cultivation of corn have been devastated by competition with U.S. farmers.

Small family farms in particular simply could not compete with big U.S. farmers who enjoy hefty federal subsidies. In the 23 years since NAFTA took effect, annual corn imports to Mexico grew from roughly 3.1 million metric tons to nearly 14 million metric tons, according to the U.S. Department of Agriculture and the U.S. Grains Council.

The change forced many Mexican farmers to shift to subsistence farming or to take up seasonal farming work far from their homes, said Timothy Wise, director of the Research and Policy Program at the Global Development and Environment Institute at Tufts University. Many others left to find work in the United States, he said.

Scientists say an increasing reliance on U.S. corn has also threatened the diversity of corn crops in Mexico, with some ancestral varieties going extinct.

That has been a point of contention in Mexico, where in pre-Hispanic times, corn was considered sacred. Corn husks were carved into pre-Hispanic temples, celebrated at festivals and mashed into tortillas that became a staple of life.

Antonio Turrent Fernandez, who is with Mexico's National Institute for Forestry, Agricultural and Animal Husbandry Research, said the government should take this opportunity to increase investments in corn production instead of looking for new import markets.

"We need our elected leaders to begin seeing farther than the ends of their nose," said Turrent.

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Suggesting that Mexico could produce four times as much corn as it currently does with the help of better technology, he said, "We need a program that would allow us to be self-sufficient in providing the most important food product in Mexico."

Part of the goal of NAFTA was to shift the economy from rural to urban areas, Turrent said. But that has made Mexico increasingly reliant on countries such as the United States.

Times staff writers Geoffrey Mohan in Los Angeles and Don Lee in Washington contributed to this report, as did Cecilia Sanchez in The Times' Mexico City bureau.

An earlier version of this article erroneously reported that last year Iowa exported about 75% of its corn production to Mexico. The actual figure is about 8%. Mexico is by far the state's biggest foreign customer for corn.